Question

23. Economic profits are NOT possible in the long run in which of the following markets? a Monopoly Oligopoly Monopolistic Competition d Duopoly Figure 1 26. Refer to Figure 1: Suppose the firm whose costs and demand are represented in the figure is a monopolist. What is the profit of this firm? a) (P4-P2)*Q1 b) (P3-P1)*Q1 c) (P6-P4)*Q1 d) (P3-P2)*Q2 27. Refer to Figure 1: Suppose the firm whose costs and demand are represented in the figure is a perfectly competitive firm. What is the short-run shutdown threshold price of the firm? a) P1 b) P2 c) P3 d) P4 Scenario 1: Perfect Competition. Consider a perfectly competitive market with 1,000 firms, where a firms have identical costs. The market price is currently set at $20 per unit, and a total of 100,000 units are sold. Suppose that each firm initially faces plant costs of $1,000 (foxed cost) and labor costs of $15 per unit of output. Assume these are the firm's only costs.

Answer 1

Q25)option C)

in Monopolistic competition, profit is possible only in short run,

Not in Long run .

In Long run, firms earn zero profit

Q26) option c)

in MONOPOLY, at eqm

MR = MC,

So Output = Q1

Price = P6

ATC = P4

So π = (P - ATC)*Q1

= (P6-P4)*Q1

Q27) option B) P2

Shut down price is Minimum of AVC, where MC cuts AVC

= P2